<div id="readability-page-1"><div><p>David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.'  So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company.  As with many other companies <strong>Zurn Elkay Water Solutions Corporation</strong> (NYSE:ZWS) makes use of debt.  But is this debt a concern to shareholders?</p><p>This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.</p><h2> Why Does Debt Bring Risk? </h2><p> Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow.  If things get really bad, the lenders can take control of the business.  However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet.  Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage.  When we examine debt levels, we first consider both cash and debt levels, together. </p> <h2> What Is Zurn Elkay Water Solutions's Net Debt? </h2><p> As you can see below, Zurn Elkay Water Solutions had US$476.1m of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail.    However, it also had US$260.1m in cash, and so its net debt is US$216.0m.  </p><figure><img height="1052" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/46888354-debt-equity-history-analysis-1-dark-2/1768923086367?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1642" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/46888354-debt-equity-history-analysis-1-dark-2/1768923086367"/><figcaption>NYSE:ZWS Debt to Equity History January 20th 2026</figcaption></figure><h2> How Healthy Is Zurn Elkay Water Solutions' Balance Sheet? </h2><p> According to the last reported balance sheet, Zurn Elkay Water Solutions had liabilities of US$288.2m due within 12 months, and liabilities of US$804.3m due beyond 12 months.   Offsetting this, it had US$260.1m in cash and US$238.1m in receivables that were due within 12 months.   So its liabilities total US$594.3m more than the combination of its cash and short-term receivables.  </p><p> Since publicly traded Zurn Elkay Water Solutions shares are worth a total of US$7.91b, it seems unlikely that this level of liabilities would be a major threat.  Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse.  </p><p><span> View our latest analysis for Zurn Elkay Water Solutions </span></p> <p> In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover).  Thus we consider debt relative to earnings both with and without depreciation and amortization expenses. </p> <p> With net debt sitting at just 0.59 times EBITDA, Zurn Elkay Water Solutions is arguably pretty conservatively geared.  And it boasts interest cover of 9.3 times, which is more than adequate.        Fortunately, Zurn Elkay Water Solutions grew its EBIT by 10.0% in the last year, making that debt load look even more manageable.      When analysing debt levels, the balance sheet is the obvious place to start.  But ultimately the future profitability of the business will decide if Zurn Elkay Water Solutions can strengthen its balance sheet over time.  So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.  </p><p> Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash.   So we clearly need to look at whether that EBIT is leading to corresponding free cash flow.    Happily for any shareholders, Zurn Elkay Water Solutions actually produced more free cash flow than EBIT over the last three years.  There's nothing better than incoming cash when it comes to staying in your lenders' good graces.   </p> <h2>Our View</h2><p> Happily, Zurn Elkay Water Solutions's impressive conversion of EBIT to free cash flow implies it has the upper hand on its debt.   And that's just the beginning of the good news since its net debt to EBITDA is also very heartening.      Looking at the bigger picture, we think Zurn Elkay Water Solutions's use of debt seems quite reasonable and we're not concerned about it.   While debt does bring risk, when used wisely it can also bring a higher return on equity.    There's no doubt that we learn most about debt from the balance sheet.  However, not all investment risk resides within the balance sheet - far from it.   Case in point: We've spotted  <strong> 1 warning sign for Zurn Elkay Water Solutions</strong>  you should be aware of.    </p> <p>If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this <strong>free</strong> list of growing businesses that have net cash on the balance sheet.</p></div></div>

<p>Zurn Elkay Water Solutions (NYSE:ZWS) has a net debt of $216.0 million, with $476.1 million in total debt and $260.1 million in cash. Its liabilities exceed cash and receivables by $594.3 million, but the company's market value is $7.91 billion, suggesting manageable risk. With a net debt to EBITDA ratio of 0.59 and an interest cover of 9.3, Zurn Elkay's debt levels appear conservative. The company has also shown a 10% growth in EBIT, indicating strong financial health and effective debt management, although one warning sign has been noted.</p>

We Think Zurn Elkay Water Solutions (NYSE:ZWS) Can Stay On Top Of Its Debt